Practice Questions
Available here.
(1.c) When markets defated Malthus
(A) A father-son quarrel
Thomas Malthus lived during the time of the French and the American Revolution, when great thinkers were optimistic about man's perfectability and the felicity that the new governments would soon deliver. These optimists eagerly awaited a utopia that was to come. The father of Malthus concurred with these optimistic sentiments, but Malthus himself did not. Some of the utopians even welcomed an increase in the population under the belief that it would mean more happy people and thus more total happiness. Malthus saw a dark side of a larger population—the fact that population might grow faster than the food supply.
Figure 1—Thomas Malthus (1766-1834)
The father and son argued about the consequences of a larger population, and as every son wishes to prove his father wrong at some point, Malthus wrote an essay called An Essay on the Principle of Population as It Affects the Future Improvement of Society.Using statistics (some provided by Benjamin Franklin) and logic, Malthus argued that the population grew at an increasing rate whereas increases in the food supply—acquired through technological innovation—proceeded at roughly the same rate, which means that eventually the population will exceed the food supply. When it does, famine will bring the population back down to a level consistent with the food supply.
Famine seems to be the last, the most dreadful resource of nature. The power of population is so superior
to the power of the earth to produce subsistence for man, that premature death must in some shape or other
visit the human race.
—Malthus, Thomas Robert (1766-1834). 1798 An Essay on the Principle of Population as It Affects the Future Improvement of Society.
This doomsday prediction wasn't really new. Aristotle had written similar ideas. But for some reason Malthus' essay went viral (nineteenth-century style) and frightened many people. It even reached the Prime Minister of the United Kingdom.(B1) Both politicians and the public began to oppose relief for the poor, believing that it just encouraged people to have children society could not feed, bringing society closer to the inevitable famine. During the Irish Potato Famine of 1845-1849 the English were reluctant to provide relief, and when their conscience forced them to provide the Irish with food, they did so reluctantly.
It is even more necessary to take care that the increase of the people should not exceed a certain number
... to neglect this is to bring certain poverty upon the citizens.
—Aristotle (384-322 BC) in Politics.
Malthus, of course, was wrong about the future, but we can hardly blame him. Many times in history, Malthus' prediction had already come true. Ancient Athens regularly experienced times when its population out-grew its food supply, and the democracy had to gather to decide who would be forced to leave Athens to establish colonies elsewhere. So many of these colonies would be established that Plato once remarked, "Like frogs around a pond we [the Greeks] have settled down upon the [Mediterranean]."(G1)
There were times when these emigrates could find no suitable home and sailed back to their Greek homes, only to have their former friends and family threaten to kill them if they unboarded the ship. Resources were so scarce in ancient Greece that family planning had to be taken very seriously. Abortion was only a crime if done without the husband's permission. Only one son was desirable, as there were limited resources for the sons to inherit. Girls were largely undesirable, as they provided little monetary benefit and could be costly, especially in terms of her dowry. Though it is shocking to hear, the main form of population control was infanticide. Once a child was born the father had to decide whether to formally accept it as his own. If he did not, the child was abandoned and left to die by exposure. Statistics show that only one out of every hundred families would raise more than one daugher. One Poseidippus remarked, "Even a rich man always exposes a daughter." In some areas there was one living female daughter out of every five sons.(D1)
These are kinds of tragedies that arose when population growth exceeded the ability of land to produce more fruit. These are the tragedies Malthus warned his contemporaries about. Malthus predicted that Europe and even the New World would eventually suffer the same population pressures as Greece, and he had every reason to believe he was right. It is one of the greatest blessings that he was wrong. It wasn't a heavenly blessing, but one of an economic nature, so let us study it intensely so that we can bestow this miracle to our descendants.
(B) The blessing of chemical fertilizer
Malthus' essay did well explaining the past, but not predicting the future. No one could have forseen the agricultural innovations that allowed food production to exceed population growth, and the nineteenth century thinker would be surprised to learn that worldwide birth rates have fallen even as food became more plentiful. This abundance of food is due mostly to chemical fertilizers. Although the major crop nutrients needs are nitrogen (N), phosphorus (P), and potassium (K), most fields are particularly lacking in nitrogen. What a shame that most of the atmosphere consists of nitrogen but very few plants can access it! Before chemical fertilizers, naturally occurring bacteria in the soil extracted nitrogen from the air and made it plant accessible (lightning performed this function also. When a field became infertile farmers would leave the field unfarmed for a year (called leaving the field "fallow") so that these bacteria to restore the field's nitrogen content. Farmers could also "rotate crops", where they would plant a legume that restored nitrogen to the soil one year and plant a crop that extracted nitrogen the next. Or, farmers would graze livestock in one region and house them overnight in a field, and the manure deposited that night would replenish the soil's nitrogen content. A few other methods of fertilization were available, but all of the ancient fertilization techniques are expensive compared to modern fertilizers.
Figure 2—A bag of 21-3-20 fertilizer is 21% nitrogen (N),
3% phosphorus (P), and 20% potassium (K), by weight
When populations exceeded the food supply the main cause was nitrogen. Ancient fertilization methods simply could not produce enough nitrogen in the soil to feed a large population. Enter human ingenuity to the rescue, where in 1903 Fritz Haber discovered how extract nitrogen from the atmosphere using advanced chemical engineering and large factories, and then process it into a form plants can consume.(L1) Farmers no longer need to acquire their nitrogen fertilizer from bacteria, crop rotations, or manure; they can now acquire it from a factory at a price 90% lower than in 1900.(B2) This process of obtaining nitrogen is referred to as the Haber process or the Haber-Bosch process.
It is important to note that Haber was pursuing science and personal ambitions, not to feed the world; and the BASF corporation which learned how to implement the Haber process on a large-scale did so mostly to make profits and partially to make Germany a stronger country, but was motivated very little by feeding the world.
Figure 3—Food Prices Have Fallen Since 1900 Even Though Population Has
Risen
Video 1—Ideas of Thomas Malthus reflected in movie In Time
As a result of Haber's discovery we now have an inexpensive nitrogen fertilizer, allowing food production to accelerate at an astonishing rate and staving off Malthus' doomsday prediction. So important is chemical nitrogen fertilizer that half of all the nitrogen in our body can be traced to fertilizer factories(C1) and we would be unable to feed 35% of today's population without it!(M1) Increases in food production has continued to exceed population growth for many reasons, such as better crop varieties and pesticides, but many believe that chemical nitrogen fertilizer deserves the most credit for feeding an expanding human population.
Song Linyuan, an elderly but spry farmer in a village northwest of Nanjing, recalls how he once kept his 1.3 acres of cropland as fertile as possible, composting household waste and spreading manure from his pigs and chickens. In all, his efforts added perhaps a hundred pounds of nitrogen per acre of land each year. He harvested 2,600 to 3,300 pounds of rice per acre.
That’s a respectable harvest, a better yield than in many parts of the world. But now he gets more than twice that: 7,200 pounds per acre. It’s a harvest many farmers can only dream of.
The difference? “Better fertilizer,” he says. We’re sitting in a shop surrounded by farmers. Song’s answer provokes a loud discussion. Some agree that fertilizer was key; others say better seeds were more important. In reality the two technologies are intertwined. The high-yielding varieties of rice and wheat that breeders created in the 1950s and 1960s could reach their full potential only if they got more nitrogen.
—Charles, Dan. May 2013. “The Curse of Fertilizer.” National Geographic.
(C) A second agricultural revolution
Agriculture has indeed entered a new era. No longer do peasant farmers provide the world with food using traditional methods. Farmers today are businesspeople operating machinery worth millions of dollars, handle toxic chemicals, use statistics to determine which bull sperm will be used to artificially inseminate her heifers, and use futures and options markets to manage risk. We had the agricultural revolution around 9,000 B.C. when humans converted from hunter-gatherers to farmers, and we had the Industrial Revolution in the nineteenth century where small artisans were replaced by giant factories. Now we have the second agricultural revolution, where the first agricultural revolution and the Industrial Revolution are combined. The results have been remarkable!
Figure 4—History of Technology
(Discover magazine; April, 2012)
Video 2—Industrial Agriculture Produces So Much Food We Can Do This With Tomatoes
(from America Revealed)(A1)
(D) Towards worldwide prosperity
The contribution of chemical fertilizers to ample food supplies is so remarkable that it has been mistaken for a miracle delivered by God. In 2013 many Guatemalans noticed that at the same time citizens were converting from Catholocism to Protestantism a number of "miracles" occured, like much larger harvests and much cheaper food. Less skeptical people noticed that something else important happened in 2013: chemical fertilizers were much easier to acquire.
[A Guatemalan citizen states] “God started moving in the whole community, through different miracles that happened—people were getting saved, even I heard miracles of people being raised from the dead, [curing alcoholism], families being restored, you didn’t see all the drunks on the street anymore. It was a complete change.” And according to Evangelical lore, not only did the character of the people…change, the God blessed and healed the land so they could grow more vegetables, and big vegetables, and the records show the vegetables got bigger.
—Cole, Sean. March 19, 2013. The Story. “Spiritual Warfare: Evangelical Protestants Convert Catholics.” American Public Media.
…a leading Guatemalan economist, published an article about [a Guatemalan region] in which he points out that the mass conversion of Evangelism occurred around the same time as chemical fertilizers, new seeds, and new crops were being introduced to Guatemala.
—Cole, Sean. March 19, 2013. The Story. “Spiritual Warfare: Evangelical Protestants Convert Catholics.” American Public Media.
The fears of Malthus have subsided due to nitrogen fertilizer and the many other discoveries in the last centuries, but discoveries alone are not enough. In the last 100 years the only famines to take place were due to political factors, not insufficient harvests, and every year more people are brought out of poverty. In 1990 43% of the world lived in extreme poverty; today that number has fallen to 21%(E1)
Figure 5—World population living on $1.25 or less each day
(The Economist; June 1, 2013)
Most of the credit [for poverty reductions in Figure 5]...must go to capitalism and free trade...
the biggest poverty-reduction measure of all is liberalizing markets to let poor people get richer. That means freeing trade betweeen countries...and within in
them.
—The Economist. "Towards the end of poverty." June 1, 2013. Page 11.
There must be markets and trade (which really are the same thing) for these discoveries to spread around the world. You see, innovations like nitrogen fertilizer will not be embraced unless people are free to profit from their use and are able to drive those not using fertilizers out-of-business (this sounds cruel, I know, but it is necessary to produce inexpensive food). Humans were only recently able to defeat the pessimistic world of Malthus because only recently have we really embraced the idea of markets, free trade, and the virtue of an honest dollar. Only in the last few hundred years were firms allowed to become large, beginning with the East India Tea Company in 1600 and leading to firms like Apple and Monsanto today. The idea of respecting someone who became wealthy through honest business is relatively new. Today you respect people like Bill Gates, even if he did not engage in philanthropy, because you know he made his fortune by producing things the public loved. Up until recently, you were more likely to spite him for it. For example, in ancient China, merchants were the lowest class of society that could exist, lower than peasant farmers. In a society that respects earning an honest buck more people will pursue an honest buck, and produce valuable goods and services for others in the process.(M2,S1)
What this means is that free-trade and markets (institutions where people buy and sell for profit) are as important as technology in reducing poverty. North Korea has the opportunity to use the exact same technologies in South Korea, but they cannot, because the government—not markets—runs the economy. Consider the nighttime photograph of North and South Korea below. Can you tell which country is which? No doubt, you can.
Figure 6—North and South Korea at night
The dearth of illumination in North Korea mimics the lack of food, where one out of every three children are chronically malnourished. Little of western culture is allowed inside North Korea. They do not allow smuggled DVDs, the internet, cell phones that can make international calls, or many other "western" things. If they are caught with a Christian Bible their entire family may be executed or sent to jail for the rest of their lives. However, the novel Gone With the Wind is an exception. They are allowed to read the book, but also to watch the film adaptation. Why does North Korea make this classic American story freely accessible to its citizens? It has to do with Scarlett's famous line, "As God as my witness: I'll never go hungry again!" Because North Korea is one of the few countries to still struggle with famine—the last big one was in the 1990s, where many were forced to eat tree bark—and the government hoped the book would help inspire its citizens to persevere.(S2)
Video 3—Inspiration for Starving Koreans? (From 1939 film version of Gone With The Wind)
The North Korean government struggles to feed its people not because it cannot adopt the productive agricultural technologies used in western democracies, but because it chooses to isolate itself from the world, cutting itself off from the wealth that trade and technology provides.
(E) Narrative about the Irish Potato Famine (1845-49) from the novel Rebels of Ireland
A good historical novel will contain a fictional plot but will also place that plot in an accurate historical setting. In Rebels of Ireland, Edward Rutherfurd displays his knowledge of economics when he describes how Malthus thought about famine. By the mid 19th century people familiar with economics had a decent understanding of how markets worked and how letting people freely trade within markets can make society overall better off. Think about the power behind that statement: allowing people to pursue their self-interest makes everyone better off!
I would hate for you to take away from this the idea that we should simply say, "let markets be free" and then absolve ourselves of all social responsibility. Yes, if you care about others you should want markets to experience little interference from government. You must also remember that markets reflect the values of the people trading, and unless you actively engage in markets with altruism and love, markets by themselves can be quite brutal. The narrative below describes how people thought about Malthus' philosophy, markets, and the starving Irish. If you were a wealthy character in the novel would you be satisfied with simply letting markets "work things out" by ignoring the starving Irish, or would you use some of your money to help feed the Irish, thereby insisting that the food market reflect your love and altruism?
Figure 7—The Rebels of Ireland by Edward Rutherfurd.
Throughout this course we will repeatedly observe the bounty of wealth that markets can deliver, but we must always remember that the compassion inherent in markets will reflect the compassion within your heart. Fill your heart with empathy, help your fellow man, and markets will be all the more glorious.
“The problem really,” said William Mountwalsh, “is that there are too many people for this island to support. The government estimates that we are well past eight million now. Farming methods, especially in the west, need much improvement. But it seems that Ireland is living proof of the theories of Malthus: that humans will always breed faster than the food supply increases. That is why we have always had wars down the ages.”
Having brought the conversation back to life, as a good host should, he turned to Doyle. “You make a study of these things, Dudley. Tell us what is the answer.”
Doyle surveyed them all. He did not mind having an audience. He paused for a moment.
“The answer,” he said, with a faint smile of satisfaction, “is there is nothing wrong with Ireland at all.”
“Nothing wrong?’ Stephen looked at him incredulously.
“Nothing,” said the economist. “And I am surprised, Mr. Smith, that you, as a Whig— which you say that you are— should think that there is.”
“Explain, Dudley,” said William with a broad smile, as he settled back in his chair.
“As a Whig,” Dudley Doyle addressed Stephen, rather as a lawyer in court addresses a witness before a jury, “you believe in free trade, do you not?”
“I do.”
“You do not think that governments should intervene, as the British government was once so fond of doing, to protect inefficient farmers and manufacturers with tariffs or restrictions on trade? You believe in the operation of the free market—that, over time, it is always best?”
“Certainly.”
“Then that is what we have. There is now an excess of people in Ireland. Very well. The result is that their labour is cheap. There is therefore an incentive for enterprising manufacturers to employ them.”
“That may happen in Ulster, but it does not happen in Clare. And the people go hungry.”
“I believe that eventually it will, but no matter. The hunger of the people is not a bad thing. It will drive them to seek work further afield. Do we not see that occurring?”
“Labourers from Clare take their spades and migrate for seasonal work as far as Leinster, or often England,” Stephen agreed.
“Excellent. Britain benefits thereby, for the cost of its labour is reduced and the Irishman is fed.”
“Many have to leave entirely, though,” Stephen said sadly, “forced to emigrate, to England or America.”
“Do you know,” interposed Mountwalsh, “that over a million people have left this island during my own lifetime? About four hundred thousand in the last decade.”
“Splendid,” said Doyle, smiling at them both. “The whole world benefits thereby. There are too many people in Ireland? Well and good. America has need of them. A vast, rich continent in need of willing hands. They can do very well there. Indeed, without Ireland, what would America be? We must take a larger view, gentlemen. The temporary misery of the Irish peasant is a blessing in disguise. Do not interfere with the market, therefore. Thanks to the market, the whole world turns.”
“But the process is so cruel,” Stephen said.
“So is nature.” There was a thoughtful pause.
...
“But they can’t just let the people starve.”
“No. And, in fact, Knox is about to get his wish. The government is going to step in. But the local men will still have to shoulder the burden and take responsibility.”
“What form will that take?”
“More or less what Knox wants. A large program of public works. The argument is that it’s wrong to give money to those who are able-bodied. It corrupts them and takes away their self-respect. They must be given work for what they get. But he’s right about the price of food being too high. There will probably have to be subsidies to keep the prices down.”
There was a hissing sound from Dudley Doyle.
The economist was shaking his head. “Take care, gentlemen,” he cried. “Take care. You may bring in cheap food, like Indian meal; or you may increase supply sufficiently to bring down prices. But do not subsidise food. It is tempting, but you must not do it. You are subverting the market. That is wrong.” He turned to Stephen. “You are a Whig. I count upon you for support.”
“I don’t know,” said Stephen.
…
“Very simple. This July and August, the potato harvest failed. When I say failed, I mean that every potato in the market was rotten. I mean that not a single field, not a single garden patch in all of Ennis, produced a single potato that could be eaten. The stink of the rotted fields wafted over the town as if it were an open plague pit. I mean, Smith, that after months of hardship, the people of Ennis failed to produce any food whatsoever of their own. Unfortunately, it was also the time of a change of government. And you know how it is when a government changes. Nothing that was done before can be right.”
“And so?”
“Why, they closed down the relief committees, of course. Nothing was done. It remained that way until October. People helped each other not to starve, but especially in the remoter places the old and the sick died off. We reported what we could, but you don’t always know at the time. There were many deaths, certainly.”
“It will be changed now.”
“Will it? How? You will provide public works?”
“On a great scale.”
“And will you subsidise food?”
“I understand not.”
“Indeed, you will not. For that would distort the market, which, in the eyes of a Whig, is a heinous crime.”
Stephen thought of Dudley Doyle. “I don’t deny it,” he confessed. “Then, since the price of food, being so scarce, has now risen to new heights, the wages you pay to these thousands of men will not be sufficient for them to buy food for their families. They will not be idle and starve, Mr. Smith; they will work and starve.” He looked at Stephen severely.
“I am only a Tory, Sir. You are a Whig, the Irish Catholic’s friend. This is your government. Why is your government so foolish?”
“I cannot answer.”
…
That afternoon, he set about his second task. This was to compose a letter. It was quite a long letter. It set out clearly what he had seen, including the conduct of the Captain, whom he commended for doing his best within his lights. The conclusion of his letter was forceful.
I have always believed in the free working of the market, and I still do. But it is also clear to me now that the market does not operate satisfactorily under extreme conditions. And the conditions in Clare now are extreme, and are becoming graver. Because of the high price of food, when it may be had, and our refusal to subsidise it, even those employed are suffering from malnutrition and those out of work will shortly starve.
Unless we feed these people, they will die.
When he had done, he sent it not to the Lord Lieutenant, nor to Dublin Castle. He sent it to the one man who he thought might be able to make something happen. He sent it to kindly William Mountwalsh.
—Rutherfurd, Edward. Rebels of Ireland : The Dublin Saga. Westminster, MD, USA:
Doubleday Publishing, 2006.
(F) Norman Borlaug and the Return of Malthus
I would hate to instill you with so much faith in markets that you absolve yourself from your moral responsibility to other humans. It is true that creativity, markets, and technology saved us from a Malthusian population collapse, but that doesn't mean we will always be this fortunate. Let us end with some words of warning from one of the most magnificent men to have ever existed: Norman Borlaug. What I call the second agricultural revolution most other people call the Green Revolution, and Borlaug was its vanguard. His tireless efforts to develop more productive plant varieties were rewarded with the 1970 Nobel Peace Prize. He deserved it. So determined was he to increase India's productivity he once planted new varieties for demonstration in India while war was being waged all around him
Figure 8—Technologies involved in the Green Revolution(B3)
During his acceptance speech he did not tout technology as our an everlasting savior. Instead, he depicted better crop varieties, fertilizers, and pesticides as tools that gave us some breathing room. It will not always save us. Malthus' warnings still ring true, and he urged us to pursue technology and population control simultaneously.
It is true that the tide of the battle against hunger has changed for the better during the past three years. But tides have a way of flowing and then ebbing again. We may be at high tide now, but ebb tide could soon set in if we become complacent and relax our efforts. For we are dealing with two opposing forces, the scientific power of food production and the biologic power of human reproduction. Man has made amazing progress recently in his potential mastery of these two contending powers. Science, invention, and technology have given him materials and methods for increasing his food supplies substantially and sometimes spectacularly, as I hope to prove tomorrow in my first address as a newly decorated and dedicated Nobel Laureate. Man also has acquired the means to reduce the rate of human reproduction effectively and humanely. He is using his powers for increasing the rate and amount of food production. But he is not yet using adequately his potential for decreasing the rate of human reproduction. The result is that the rate of population increase exceeds the rate of increase in food production in some areas.
There can be no permanent progress in the battle against hunger until the agencies that fight for increased food production and those that fight for population control unite in a common effort. Fighting alone, they may win temporary skirmishes, but united they can win a decisive and lasting victory to provide food and other amenities of a progressive civilization for the benefit of all mankind.
Then, indeed, Alfred Nobel's efforts to promote Brotherhood between nations and their peoples will become a reality.
Let our wills say that it shall be so.
—Borlaug, Norman. December 10, 1970. Acceptance Speech for the 1970 Nobel Peace Prize.
Accessed October 11, 2013 at http://www.nobelprize.org/nobel_prizes/peace/laureates/1970/borlaug-acceptance.html
References
(A1) America Revealed [documentary]. April 11, 2012. "Food Machine." Season 1. Episode 1. Young, Nic [director]. Bernanke, Jaime and Joseph Dorman [writers]. Kwon, Yul [host]. Public Broadcasting Service.
(B1) Buchholz, Todd G. 1990. New Ideas From Dead Economists. Plume/Penguin: NY, NY.
(B2) Bailey, Ronald. July 2013. “The Power of People.” Reason magazine.
(B3) Bourne, Joel. June 2009. "The Global Food Crisis." National Geographic. Accessed October 11, 2013 at http://ngm.nationalgeographic.com/2009/06/cheap-food/bourne-text
(C1) Charles, Dan. May 2013. “The Curse of Fertilizer.” National Geographic.
(D1) Durant, Will. The Story of Civiliation. Part II. The Life of Greece. Chapter 23: Greece and Macedon. Page 569.
(E1) The Economist. June 1, 2013. "Towards the end of poverty. Page 11.
(G1) Garland, Robert. 2013. The Other Side of History: Daily Life in the Ancient World [lectures]. Lecture 16: Being a Greek Refugee. The Teaching Company.
(L1)Leigh, G. J. 2004. The World’s Greatest Fix: A History of Nitrogen and Agriculture. Oxford Publishing: NY, NY.
(M1) McNeill, J. R. 2000. Something New Under the Sun: An Environmental History of the Twentieth-Century World. Norton: NY, NY.
(M2) McClosky, Deirdre N. 2010. Bourgeois Dignity. The University of Chicago Press: Chicago, IL.
(S1) Seabright, Paul. 2004. The Company of Strangers. Princeton University Press: Princeton, NJ.
(S2) Sullivan, Tim. October 2013. "Now You See It: Inside North Korea's tightly controlled society, the truth is rarely simple." National Geographic. Pages 112-117.
